New Patent Rules: What You Need to Know

Christina DesMarais is an Inc.com contributor who writes about the tech startup community, covering innovative ideas, news, and trends. On Google+, add her to one of your circles. Have a tip? Email her at christinadesmarais (at) live (dot) com.

If you hold patents or plan to, heads up: New rules have gone into effect that constitute the biggest shake-up of the U.S. patent system in decades and maybe ever, some say.

On September 16, the second of three waves of rules began under the America Invents Act (AIA) of 2011, legislation that brings U.S. law more in line with how the rest of the world deals with patents. Here's what to expect:

Faster Dispute Resolution

Patent disputes--such as the so-called "trial of the century" between Apple and Samsung--are costly and time consuming for everyone. These big lawsuits often involve sideshows--like bombshell emails from executives that really have little to do with whether there are valid patent rights, and questions about who lied to the U.S. Patent and Trademark Office.

According to Ed Walsh, a shareholder in the IP law firm Wolf Greenfield, AIA promotes moving the question of whether a patent was properly granted out of district court and puts it back in front of the USPTO, a move that's supposed to bring greater focus on the merits of the dispute and less on the sideshows, making the process of settling a dispute faster and less costly in the long term.

While there have been some concerns that putting all this work in the lap of the USPTO will bring its ability to process patents to a grinding halt, Walsh doesn't believe it will because the agency has been hiring scads of judges to preside over these scuffles. Plus, whereas the fee to file a patent is less than $2000, requesting a post-grant review (with up to 20 complaints for another entity's patent) from the USPTO will cost $35,800 under the new rules.

Some have argued (PDF) that this fee will make it difficult for small businesses to file a dispute.

While Walsh believes that's true, he says it's important to remember that contested proceedings, whether in court or before the USPTO, shouldn't be started lightly. He goes on,

"These proceedings will likely only be used when there is a substantial amount at stake, which may create options for funding them or, though expensive, these proceedings may be more useful and less expensive than other options... [M]oving more information back to the patent office [is] only likely going to be relevant to people who either need to enforce or license or have someone challenging their patents. So that will be a smaller number of people."

Competitors Can Give Input Before a Patent Is Issued

The new rules also allow for pre-issue submissions that can help companies avoid costly litigation down the road.

"If you see someone is trying to patent something that would interfere with your business but you don't think that [it] would be a valid patent... you have the opportunity to provide information to the patent examiner who's looking at that patent," Walsh says. "What you would hope... is either the examiner would decide 'I agree with you, there isn't a reason to issue a patent here because this idea is not new based on this information you've shown me.' Or, they would say 'Well, there is perhaps some element of something new here but we need to make sure the patent is limited to just that very new piece.'"

Another Set of Changes Coming in March

Beginning March 16, the AIA also changes the U.S. patent model from a first-to-invent system to a first-to-file system.

"You have to file a patent application on a new idea, but the statute is redefining what kinds of events will put an idea into the public domain so it can't then be patented," Walsh says.

According to Charley Moore, founder of online legal service Rocket Lawyer (which landed at No. 72 on the Inc. 5000 list), small business inventors who have an invention need to get it on file as soon as possible or they could potentially lose the ability to patent it in the future, or at least in the same way they can now.

"It's definitely something an inventor at a minimum should look at--a provisional patent application plus a consultation with a patent lawyer. You can get all of that done for less than $1,000," he says.

Moore also points out that if a small business qualifies as a "Micro Entity"--meaning it has fewer than four previously filed patent applications and a gross income that's less than three times the median household income--it can qualify for discounted fees to the tune of 75% off the filing, search, and examination fees. He says these Micro Entities can also get 50% off the $4,800 to request a fast track, making the cost $2,400 for a USPTO review.

For more information, visit the USPTO, which has dedicated an entire section of its website to the new rules.